COLUMBUS, Ohio -- American Insurance Group (AIG) Senior vice President of Communications Nicholas Ashooh said Wednesday that the company is legally bound to honor its contracts that call for retention bonuses.
AIG is under fire for $220 million in retention bonuses paid to employees in its troubled financial products division. The most recent payment of $165 million began to be paid last Friday and caused a furor.
The retention payments -- ranging from $1,000 to nearly $6.5 million -- were put together in early 2008.
RELATED: AIG Chairman Says Retention Payments Distasteful
Speaking to reporters before a scheduled lunch appearance at The Athletic Club in downtown Columbus, Ashooh defended his company's actions, saying that while AIG has "essentially collapsed," the company risks greater legal costs if it does not pay out the bonuses promised one year ago, before AIG's troubles became apparent.
"You can believe we've looked at every which way we can to figure out how to avoid paying them -- especially in this environment. The problem, it really comes down to, I knot it means nothing to people who are outraged and who are having a difficult time today, but contracts are a serious issue and there are serious ramifications if you don't honor them," Ashooh said.
Ashooh said the company is working to sell off some of its business interests to begin paying back the U.S. government. AIG plans to close its financial products business -- the division most responsible for the company's fall.
Outside of The Athletic Club, several Central Ohioans expressed frustration with both AIG, for paying the bonuses, and with Congress for not ensuring that the bailout money given to AIG would not be used to pay the bonuses.
"I don't think they should spend any of the stimulus money on bonuses. I think the people that are receiving the bonuses should generously return them," said Yvonne Inman, a Columbus resident.
"I'm disappointed that our Congress is not doing a better job of oversight," said Ned Maxwell, a Columbus resident.
The Associated Press contributed to the content of this article.
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